Monte Paschi's top shareholder would not welcome January capital hike

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SIENA, Italy (Reuters) - The banking foundation that is the biggest shareholder of Italy’s loss-making bank Monte dei Paschi di Siena (BMPS.MI) said on Tuesday carrying out a planned capital increase in January would not be a welcome move.

People are reflected in the window of a Monte Dei Paschi Di Siena bank in Rome January 29, 2013. REUTERS/Max Rossi

Earlier this month, Monte Paschi Chief Executive Fabrizio Viola told analysts there were three possible windows for the capital hike to be launched - January 2014, June or the end of the year.

“It’s clear that the more time goes by, the more difficult it gets,” Viola said.

When reporters asked Alessandra Mansi, the head of the foundation, what she thought about doing the cash call in January, she replied: “For us this prospect is very penalizing.”

The scandal-hit bank must carry out a capital increase of 2.5 billion euros ($3.38 billion) by the end of 2014 as part of a tough restructuring plan requested by the European Commission as a condition for approving a state bailout.

The foundation, which owns 37.5 percent of the Siena-based bank, is under pressure to sell its shares quickly since the cash call could weigh on the stock price.

The sale will be a major shift for the foundation, which has close ties to local politicians, and until 2011 ran up big debts to keep control of the bank.

Mansi said the foundation needed more time because of the “extreme complexity” it found itself in.

Monte Paschi is at the center of a judicial probe over its costly 2007 acquisition of smaller rival Antonveneta and risky derivatives trades it made in the deal’s aftermath.

($1 = 0.7394 euros)

Reporting by Silvia Ognibene, writing by Stephen Jewkes; editing by David Evans